We often treat service as a cost center and promotions as a profit center. Yet amazing service can spread faster than any advertising and there can be a hidden cost from too many promotions.

Years ago, I first discovered Utrecht, an art supply chain with stores usually staffed by artists. After an uncommonly helpful artist/salesperson helped me choose a set of technical pens, I became an advocate, and shared my experience with others.

I signed up to receive emails and get a loyalty card. I even gave my main email address, rather than the one I reserve for “brands that deal-spam”. Soon though, my inbox looked like this, with a slightly different deal shouting for my attention every 2-3 days.
My perception of the brand dropped and I began to see Utrecht as just another discount retailer.

Recently I had problems placing an order online with Utrecht (technical web site errors followed by a lengthy order delay with no explanation). Utrecht didn’t reply to a single email from me. They continued to send deal-spam, but nothing actually relevant to me as a current customer with a problem.

The Utrecht story illustrates a common world view in marketing. Many brands place more value on a promotion campaign designed to acquire customers than a service plan designed to keep them.

I drew the following cartoons after similar experiences with United and Vonage.

10 Comments

All three strips are funny and scary at the same time because they’re all so true. You, sir, really hit the nail on the head. How many companies out there can’t recognize their problems even if these bit them on the leg?

This cartoon should be stapled to every restaurant owner’s hand, to prevent them from diving into groupon without thinking about it.

Far better to spend that cash on more or better trained staff so that your existing customers won’t even think about going anywhere else, than spending money on ‘promotions’ to show even more people how bad you are.

I do agree with you about the importance of good service. But with limited resources, I would tell a company to continue to offer discounts. The sad truth is that a retailer like Utrecht can’t afford to be beaten on price by the Amazons of the world. Their loyal customers are likely people who require art supplies frequently – so these are also the people who can’t afford to pay more (if you only needed one set of pens a year, you might be willing to pay an extra 2 bucks, but this isn’t sustainable if you’re purchasing regularly). When your business depends on loyal, frequent buyers, price competition has to come into play, maybe before service quality (depending on the business).

In an ideal world, a company has adequate resources and they don’t have to make a trade off. Le sigh…

it might relate to new product development too. this cartoon shows a company with (what I call) a ‘sub-optimal’ offering. perhaps the key question for them is: can we create additional value for the customer with services? do customers recognize our potential value? and how do we, as a company, benefit from that value too?

creating great customer value is not easy. it might even challenge existing capabilities and mindset; but it could lead to higher loyalty and increased profitability.

by the way, do all products have to be flabbergasting and wow? perhaps not. there are different needs and different solutions, but all of them must have a good fit to that need. if customers won’t pay the full price, it might be indeed a sign that the offering just doesn’t cut it.

i, as a customer am happy to spend hard-earned money, but i don’t like to be fooled either. but nobody does i guess. 😉

Great cartoons! I would add that people STILL buy from people they like. And, yes, this does fall under service, I also know that consumers want to BELIEVE they are getting a deal. So, a company does not have to “give the farm” away, so to speak but I think keeping promotions clean and simple, whet’s the consumers appetite.

Good or the rare great service stems from one thing…culture. You had a memorable experience due to someone that cared about what they do. The problem with most companies is that a lot of them capture that magic early on; however, once they scale it they lose focus and service suffers.

Tom, I love the Utrecht email screenshot. I’ve seen the same problem with Gap and Banana Republic — I like their products, but I don’t want to get emails from them several times a week. I finally unsubscribed.

I’m working to improve client service at my marketing agency — it’s a process, but definitely better than putting that time and money toward advertising. One of our first steps was creating a transparent Client Bill of Rights, so people know what to expect… as far as I can tell, none of our local competitors do this: http://www.coalmarch.com/client-bill-of-rights.php

I too am perplexed that big brands and small businesses alike place so much importance on promotions, while ignoring the customer experience. Sure, heavy discounting and coupons will make the cash register ring in the short term, but at what cost?

Trying to build brand loyalty on price is an impossible task. There is always going to be someone out there who is willing to go out a business faster than you! Conversely, creating and delivering a remarkable customer experience is what earns true customer loyalty, and eventually profits.

Just look at Chick-fil-A, who is very service-centric. Their staff is courteous, they become intertwined in the local community, and they spend more than $1M per year to evaluate their service. As a result, they have the most loyal customers of any restaurant around (at least down here in Florida).

Chick-fil-A seems to be doing pretty well despite adopting a “service” strategy rather than a “promotion” strategy – their 2010 sales increase 11.4% to $3.6 billion.

Great commentary from everyone, thanks! I particularly loved the specific examples from Karl and Donald with specific examples from Coalmarch and Chick-fil-A.

I agree with Elizabeth’s point that all businesses must compete with the Amazons of the world, which creates new pressures. The decision they face is how to compete with Amazon. I think that competing on price is a losing strategy. Amazon will always win that game. The better approach in my view is to do what Amazon can’t – provide amazing, highly focused expertise around a niche area, like art supplies. If Utrecht were to add some actual value to their emails and lower the frequency (a weekly or bi-weekly email that included a comparison of cold pressed versus hot pressed watercolor paper for example), I would read that regularly and appreciate the communication. That appreciation and trust in their expertise would lead to sales. I would have more confidence in my purchase, particularly when it included Utrecht-branded products not available elsewhere. There’s a time and a place for discounting, but when a company is on deal 2-3X a week, it ceases to become a discount. The discount price effectively becomes the new base price. That’s where Amazon wins and Utrecht will always be playing catch-up.

As Elizabeth said, there are uneasy trade offs in all of this of course. This week’s cartoon print goes to Elizabeth. Many thanks, everyone, for the great banter…